Oil prices held firm at around $47 a barrel today amid a tightening outlook for market fundamentals and sliding US temperatures.
US oil dipped 11 cents to $46.99 a barrel by midday in Asian trade, holding on to most of a 3.6 per cent rally the previous day. Over the preceding two weeks, prices had tumbled from nearly $50 to dip below $45 for the first time in a month.
But revised forecasts for weaker non-OPEC global oil production and stronger demand this year helped turn the market's tide yesterday, easing worries about a potential glut developing during the seasonally weak second quarter.
"A material cut in January OPEC production and disappointing growth from non-OPEC producers have thrown cold water on many of the market's concerns about near-term oversupply," Merrill Lynch said in a report.
In its monthly report, the International Energy Agency, which advises industrialised nations on energy policy, cut its forecast for non-OPEC oil supply growth this year, revised upward estimates of demand and predicted a sharp fall in stocks.
Disappointing supply growth, particularly from number two producer Russia, has been compounded by the pace of incremental consumption, which last year grew at the fastest rate in a generation to fuel a 34 percent price rally.
Forecasts that winter in the US Northeast might not end as mildly as expected gave renewed strength to heating oil prices, which had fallen nearly 14 per cent in the two weeks to last Monday.
Private weather forecaster EarthSat said on Thursday the U.S. winter would be colder from now through March, in contrast to the National Weather Service, which last month called for a warmer-than-normal late winter.
Temperatures next week in the Northeast, which consumes the bulk of oil demand in the world's biggest energy user, should be near to below normal, forecasters Meteorlogix said.